Thank goodness the Constitution is flexible enough to allow the government to claw back this money from those AIG people.

4:32 pm March 18, 2009

Marc R wrote:

Best. Parenthetical. Post. Title. Ever.

I left my bonus in El Segundo . . .

4:33 pm March 18, 2009

WTF wrote:

This is a frightening conclusion. Where does it stop? Today, it's because they are "outraged" over something they clearly knew about and could have addressed ahead of time. What's to say tomorrow, they decide that they need more money to fund all of their worthless programs, so they pass a tax that is retro-active on everyone? I know this is a stretch, but if it can apply to a few, I don't see why it couldn't be applied to the masses. These leaders need to go or we're all in a heap of trouble.

4:45 pm March 18, 2009

Immediate problems wrote:

are 1) the whole point of this law would be *not* to "pass[] a . . . broad law" but one that "target[ed] a closed class." Just because the executives aren't named, if the legislation in practice served only to strip a couple hundred execs of their bonuses, it seems that it could be vulnerable to a Bill of Attainder challenge. 2) even though a tax is generally not a taking, when you are taxing at a rate approaching 100% it seems that the courts similarly would have to consider looking through the nominal character of the act to its practical effect. Otherwise, the next time it needed to build a road through my house, my state could decide that it was necessary to levy a 95% "tax" on my house and use that as leverage to take my house without providing just compensation.

I think Tribe is looking at this from too abstracted a viewpoint: If Congress passes a law that, in effect, simply yanks these bonuses, there are serious questions about that act's legitimacy.

An alternate theory for such an action might be as an exercise of Congress's *Bankruptcy* power. Presumably Congress has the power broadly to account for the reorganization and liquidation of private debt. If the AIG bailout/takeover is construed as a form of exercise of the Bankruptcy power, perhaps taking back the bonuses could be interpreted similar to a fraudulent transfer/clawback type action in bankruptcy.

Generally, when the government takes over a company (or enables its reorganization), it makes sense that it would have the power to rescind contracts. Usually this comes through statutory bankruptcy processes, but it seems that this was avoided in this case (probably because taking AIG through bankruptcy would have crushed market confidence). But perhaps the government could exercise bankruptcy-like powers on an ad hoc basis?

4:52 pm March 18, 2009

Agree- far too abstract wrote:

Very blanket responses without much in depth analysis. Clearly C- /D+ law school final work...

5:00 pm March 18, 2009

Tom wrote:

I think if the government can grab this much power from parsing the constitution in such a way then I think it is time for a revolution. No government should have to power to tax in such a way. I will open the door, and there is ample proof of them doing so, to allow the government to confiscate anybodies hard earned money if they (the government) feels that such a person should not have earned it.
No government should be able to do what the current government is doing under the excuse of financial ruin and bailouts and we through the 2nd amendment need to remind them that they will suffer the consequences by continuing to destroy this nation by bending the constitution in such a manner.

5:02 pm March 18, 2009

Execute Tribe wrote:

Tribe is your typical leftist hack, who can only throw together vague, quasi-analytical answers, which have no relation to the plain meaning of the constitution.

5:07 pm March 18, 2009

David Rogers wrote:

I believe Tribe is correct about all of the above, EXCEPT the BIll of Attainder. Having just litigated a BIll of Attainder case, I'm up on this. The most relevant case is United States v. Lovett, 328 U. S. 303 (1946) (federal law preventing payment to specified individuals struck down as bill of attainder).

IF a law specifically taxing AIG employees is passed, it WILL be struck down. Of course, that doesn't mean the Congress and the President won't pass such an unconstitutional law. Willful obdurateness in the face of clear Constitutional prohibition is by no means unprecedented.

It's just wrong. Particularly if the President claims to be a former Constitutional Law professor.

5:12 pm March 18, 2009

Mark Kaskin wrote:

Larry Tribe's blithe analysis indicates to me that he construes the Constitution as he deems necessary to support his statist goals.

I particularly find interesting that the Federal government can retroactively tax individuals at a 100% rate because in his view a financial asset, such as a Federal Reserve Note (those little green paper slips in your wallet) are not property, therefore confiscation of 100% of your financial assets by gubmint is not a "taking" under the Fifth Amendment.

Wow, what kind of drug do you use to make such a tortuous construction of the Takings Clause to make such a differentiation? Would it be a different outcome if AIG paid their employees bonuses in gold or real property instead of in gubmint fiat currency? It seems as though that is the distinction Larry is making in what constitutes a "taking" or property.

Tribe has always been a statist, flexible contortionist with few principles except obtaining his desired outcome with quite inane interpretations of the Constitution and the underlying intent of the Founders - or even the irrationality of his logic when carried into other hypotheticals.

I weep for Harvard Law students having to study Con Law from this pseudopolitician.

5:14 pm March 18, 2009

wondering wrote:

I always assumed that the contracts clause also barred the FEDERAL government from passing laws impinging existing contracts. May it is some other Constitutional provision, or maybe there are federal cases that have interpreted it to apply to the federal government.

Still I don't see it invalidating taxing these SOBS to hell. Do it, though I assume Obama will never sign it because the GOP would just label him as a massive tax raiser.

5:18 pm March 18, 2009

William Klawonn wrote:

This is not thoughtful and objective constitutional analysis. This is advocacy.

5:22 pm March 18, 2009

Expediency wrote:

Tribe would be a good choice for Obama's Supreme Court, being unencumbered by basic concepts of fairness and focused entirely on expedient solutions to non-problems. The bonuses are needed to retain people who can unwind trillions of dollars in AIG investments, and without them, AIG would collapse, dragging much more with it. In other words, stupid, the bonuses may be justified.

As for Bill of Attainder, the Hawaii Supreme Court recently invalidated a special law that was dressed up as a general law to allow the superferry to operate without an environmental impact statement. A rose by any other name is still a rose, the court said, needing, however, more than 100 pages to say that. Principles of equal protection and fairness are basic to our legal system, and they weigh heavily against special favors and special punishments of the kind now being considered in Washington. I expect nothing from the Obama Gang, but this kind of abuse of power is far more serious and far more corrosive than anything AIG has or may do.

5:27 pm March 18, 2009

Lex wrote:

So the would-be legislative history of the bonus clawback statute will turn a blind eye to what even the Supremes will know is the basis and intent of the bills. Form trumps substance is the new agenda.

5:34 pm March 18, 2009

Anonymous wrote:

To Mr. Kaskin - You may wish to read the 16th Amendment to the consitution, which highlight the distinction that professor Tribe was making on takings. What matters is tax vs. confiscation, not the type of poperty involved.

5:45 pm March 18, 2009

Anon wrote:

The Law Blog notes that, according to the NY Times, "some of the AIG employees are thought to be foreigners based in offices abroad." For non-US nationals, Sen. Reid and Prof. Tribe will also want to consider the impact of the requirement under NAFTA Chapter 11 (for Canadian and Mexican nationals) and under about 40 US bilateral investment treaties of full compensation for expropriations and compensation for failure to provide "fair and equitable treatment."

5:55 pm March 18, 2009

Due Process wrote:

A substantial increase in tax for a transaction already consummated, like these bonus payments, may also trigger application of the Due Process Clause. Justice Kennedy noted in his concurrence in Eastern Eenterprise v. Apfel, 524 US 498 (1998) that the Due Process may require annulment of retroactive legislation even if the Fifth Amendment Takings Clause is not applicable. Justice Kennedy stated:

" When the constitutionality of the Coal Act is tested under the Due Process Clause, it must be invalidated. Accepted principles forbidding retroactive legislation of this type are sufficient to dispose of the case.

Although we have been hesitant to subject economic legislation to due process scrutiny as a general matter, the Court has given careful consideration to due process challenges to legislation with retroactive effects. As today’s plurality opinion notes, for centuries our law has harbored a singular distrust of retroactive statutes. Ante, at 31. In the words of Chancellor Kent, “A retroactive statute would partake in its character of the mischiefs of an ex post facto law … ; and in every other case relating to contracts or property, it would be against every sound principle.” 1 J. Kent, Commentaries on American Law *455; see also ibid. (rule against retroactive application of statutes to be “founded not only in English law, but on the principles of general jurisprudence”). Justice Story reached a similar conclusion: “Retrospective laws are, indeed, generally unjust; and, as has been forcibly said, neither accord with sound legislation nor with the fundamental principles of the social compact.” 2 J. Story, Commentaries on the Constitution §1398 (1833).

The Court’s due process jurisprudence reflects this distrust. For example, in Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976), the Court held due process requires an inquiry into whether in enacting the retroactive law the legislature acted in an arbitrary and irrational way. Even though prospective economic legislation carries with it the presumption of constitutionality, “[i]t does not follow … that what Congress can legislate prospectively it can legislate retrospectively. The retrospective aspects of [economic] legislation, as well as the prospective aspects, must meet the test of due process, and the justifications for the latter may not suffice for the former.” Id., at 16—17. We have repeated this formulation in numerous recent decisions and given serious consideration to retroactivity-based due process challenges, all without questioning the validity of the underlying due process principle. United States v. Carlton, 512 U.S. 26, 31 (1994); Concrete Pipe, supra, at 636—641; General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992); United States v. Sperry Corp., 493 U.S. 52, 64 (1989); United States v. Hemme, 476 U.S. 558, 567—572 (1986); Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U.S. 717, 729—730 (1984). These decisions treat due process challenges based on the retroactive character of the
statutes in question as serious and meritorious, thus confirming the vitality of our legal tradition’s disfavor of retroactive economic legislation. Indeed, it is no accident that the primary retroactivity precedents upon which today’s plurality opinion relies in its takings analysis were grounded in due process. Ante, at 22—26 (citing Turner Elkhorn, R. A. Gray, and Concrete Pipe).

These cases reflect our recognition that retroactive lawmaking is a particular concern for the courts because of the legislative “tempt[ation] to use retroactive legislation as a means of retribution against unpopular groups or individuals.” Landgraf v. USI Film Products, 511 U.S. 244, 266 (1994); see also Hochman, The Supreme Court and the Constitutionality of Retroactive Legislation, 73 Harv. L. Rev. 692, 693 (1960) (a retroactive law “may be passed with an exact knowledge of who will benefit from it”). If retroactive laws change the legal consequences of transactions long closed, the change can destroy the reasonable certainty and security which are the very objects of property ownership. As a consequence, due process protection for property must be understood to incorporate our settled tradition against retroactive laws of great severity. Groups targeted by retroactive laws, were they to be denied all protection, would have a justified fear that a government once formed to protect expectations now can destroy them. Both stability of investment and confidence in the constitutional system, then, are secured by due process restrictions against severe retroactive legislation."

Justice Kennedy also made the same point in his concurrence in the more recent case of Chevron USA v. Lingle, 544 US 528 (2005).

5:57 pm March 18, 2009

Anonie wrote:

This may be Constitutional, but that doesn't mean it isn't borne of tyrannical governance. We're from the government and we are going to take your money because we can. Thanks for playing.

5:58 pm March 18, 2009

Andrew P wrote:

The income tax ammendment to the constitution gives Congress the unlimited power to tax income. End of story. The only problem would be that the AIG division in question is British. Congress could try to tax the foreigners, but the British/ EU gov't would not enforce it. Unless of course those bonus recipients were stupid enough to set foot on US soil. Then they could be arrested and put in prison until they paid up. And I am sure the EU government would retailiate against such an infringement of their soverignty.

7:03 pm March 18, 2009

Anon II wrote:

Another NAFTA/Investment treaty problem - This tax would be targeted only at individuals employed by one company, AIG. Individuals receiving bonuses "in like circumstances," but employed by a company other than AIG, would not be similarly taxed. If their employment contracts are considered investments, that potentially triggers the anti-discrimination "national treatment" and "most favoured nation" clauses in NAFTA Articles 1102 and 1103 and similar provisions of US other investment treaties. For example, the "national treatment" commitment in NAFTA Article 1102 reads:

"Article 1102: National Treatment

1. Each Party shall accord to investors of another Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

2. Each Party shall accord to investments of investors of another Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments.

**** "

7:11 pm March 18, 2009

Poor Dude wrote:

I find it interesting that there's a huge Constitutional argument surrounding whether or not our government can effectively sieze (by retro-actively taxing at nearly 100 percent) the income of a few hundred people, but I've seen hardly anyone discussing the constitutionality of the OTS and FDIC seizing private or publicly-held banks without ANY compensation to their owners. In the case of WaMu, our government seized $307 BILLION (not million) dollars in private assets and then sold them the next morning to another private entity --- and then pocketed the proceeds. It'd be nice if someone would ask Mr. Tribe if he felt THAT action violated our Constitution.

7:56 pm March 18, 2009

16th Amendment wrote:

The 16th Amendment doesn't say taxes may be imposed without regard to fundamental constitutional rights. A law that imposed income tax on blacks but not whites would be unconstitutional.

8:47 pm March 18, 2009

The bottom 50 don't pay taxes wrote:

16th Amendment wrote:

"The 16th Amendment doesn’t say taxes may be imposed without regard to fundamental constitutional rights. A law that imposed income tax on blacks but not whites would be unconstitutional."

And extremely ineffective.

10:43 pm March 18, 2009

Jake wrote:

Silly topic. There are over nine months yet to go in 2009. Congress can enact whatever legislation it pleases to tax income received by individuals in 2009 at whatever tax rate Congress deems appropriate. No issue of retroactivity even remotely exists. (Taxing the heck out of the AIG bonus recipients still has nothing to do with sound tax policy, but the Obama administration already has shown that it favors the Powerball mode of federal income taxation. Random payoffs unmarked by sound policy or economic reasoning.)

10:50 pm March 18, 2009

SE wrote:

Clearly an example of nonsense rambling to justify a gut reaction.

12:08 am March 19, 2009

Ken wrote:

dear poor dude,

WAMU was run by a bunch of nitwits, shareholder equity was wiped but the bondholders were saved by the government.

12:24 am March 19, 2009

Dave wrote:

Does anyone care that GE received TARP money via GE Capital. Do you realize GE owns NBC, now I like Olbermann and Williams but I believe they make well in excess of 5 million per year each.

12:30 am March 19, 2009

Ann wrote:

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Ok, if you have to pass a "broad law" to withstand constitutional muster, make sure it claws back full pensions given to Congress (including staffers) after only FIVE years of service, Fannie & Freddie bonuses, the bailout of Maxine Waters' husband's bank, and most importantly, every federal dollar given to a school that does not let ROTC on campus, including Lawrence's. Yes we can!

10:29 am March 19, 2009

Chris wrote:

It seems like the biggest problem is still the Attainder question. In my opinion, even targeting all employees of firms receiving bailout money seems like punishment of a specific class of individuals; though, the specificity issue has never been taken up by a court. In SBC v. FCC, Judge Jolly laid out a three-pronged test for punishment: "(1) whether the challenged statute falls within the historical meaning of legislative punishment, (2) whether the statute, 'viewed in terms of the type and severity of the burdens imposed, reasonably can be said to further nonpunitive legislative purposes'; and (3) whether the legislative record 'evinces a congressional intent to punish.'" First, a 90%+ tax is actually a fine enforced using the tax code, and a fine does fall within the historical meaning of legislative punishment. Second, it doesn't seem like this law serves any purpose except to punish AIG employees; if there is a legitimate purpose because AIG received federal money, then that opens the door for the congress to fine all employees of any company receiving any federal money whenever it chooses. Even so, it would be AIG that committed the wrong, not its employees. Third, there is definite intent of congressional intent to punish; suggestions that employees commit suicide are evidence enough.

As a taxpayer, I don't want my money going to pay these people, but I am much more fearful of the government abrogating private contracts and passing bills of attainder. The damage to liberty and economic freedom in this country would doom it. In any case, AIG's employees are legally blameless in their receipt of bonuses. They negotiated contracts, which their ultimate employer, the federal government, approved of, if not directly, then at least tacitly. The government should have renegotiated the contracts upon its purchase of 80% of AIG. Because it did not, it assumed those payments liabilities when it took over. I know this is distasteful to many people, including myself, but again, having the government breaking private contracts and punitively punishing individuals is even more distasteful. The government cannot play by different rules; if rule of law breaks down in this country, we are no better than Russia or China.

I think the government has been completely inept in managing these bailouts. We have three government-owned major zombie-like entities - AIG, Freddie Mac, and Fannie Mae - and are on the verge of creating another one, Citigroup. The government should come up with a clear resolution process to wind up and close down these firms: (1) put all the toxic assets into a sufficiently capitalized subsidiary that will restructure the assets sell them off when the markets recover, (2) sell off all separable pieces of the company to private buyers to raise cash, and (3) either sell whatever viable entity remains back to the public market or liquidate the business and dividend the remaining cash to payback taxpayers. Instead, the government seems to happy owning 80% of these entities yet not taking an active role in their day-to-day management, so much so that Treasury claims to even know about the AIG bonuses until they were paid.

11:20 am March 19, 2009

Failure to anticipate wrote:

The government could have either "renegotiated" the contracts, or simply informed AIG management that as a condition of the bailout, it must repudiate the contracts. A contract is a promise to perform or pay damages. AIG/the government should have walked away from the contracts and either negotiated reduced payouts or let the would-be bonus-recipients sue (and then used available defenses, which I imagine would allow them to somehow work in a discussion of what the recipients' reasonable expectations of recovery would have been if the government had failed to intervene).

Sorry if this double-posts; can't tell if it went through the first time.

11:21 am March 19, 2009

WAP wrote:

There is already a 200% tax in the Code. Section 4958 imposes an excise tax on excess benefit transactions involving tax exempt entities and their senior executives. If the senior executive receives unreasonable compensation, he must pay it back and pay a 25% excise tax. If he doesn't pay it back, he is subject to a 200% excise tax. This is quite an effective stick. Presumably something similar could be done in the AIG situation (making sure, of course, that the tax is not too targeted).

12:14 pm March 19, 2009

Phife Dawg wrote:

While I am only out of law school nine years, this "analysis" by Tribe is a horrifyingly broad read of what is constitutional and further proof that most con law professors have moved even further left (entering Hugo Chavez territory but at least he has referendums before rewriting the constitution). I can only assume that he will be on Obama's short list for the Supreme Court and that is scary. His analysis is a perfect example of the outcome-oriented interpretation of the constitution that has shredded the document of much of its meaning.

1:49 pm March 19, 2009

Andy A wrote:

The legislative branch can tax anything if they want to , just as they can eliminate deductions .

2:14 pm March 19, 2009

Randi wrote:

I loved Chis' 10:29 comment.... am in FULL agreement.

3:43 pm March 19, 2009

Anonymous wrote:

I'm not Larry Tribe, but i am confused. Sure, scotus held in US v Carlton, for example, that ex post facto tax laws are constitutional so long as they pass rationality review. OK, fine. However, the majority needed to distinguish from earlier precedents holding that ex post facto tax laws are unconstitutional. The appeals court in Carlton rules for the taxpayer, relying on Blodgett v. Holden and Untermyer v. Anderson. The majority claimed that Blodgett and Untermeyer didn't control: they both applied to the imposition of "an entirely new tax." That situation was, in the majority's view (and here it relies on US v Hemme), different in kind from the mere closing of a loophole of ambiguity (the case in Carlton) or changing of a rate scheme in an existing tax. However, here we have an entirely new tax, no?

3:44 pm March 19, 2009

Ben_H wrote:

I think this will have some constitutionality problems. Scotus held in US v Carlton that ex post facto tax laws are constitutional so long as they pass rationality review. OK, fine. However, the majority needed to distinguish from earlier precedents holding that ex post facto tax laws are unconstitutional. The appeals court in Carlton rules for the taxpayer, relying on Blodgett v. Holden and Untermyer v. Anderson. The majority claimed that Blodgett and Untermeyer didn't control: they both applied to the imposition of "an entirely new tax." That situation was, in the majority's view (and here it relies on US v Hemme), different in kind from the mere closing of a loophole of ambiguity (the case in Carlton) or changing of a rate scheme in an existing tax. However, here we have an entirely new tax, no? Discuss...

4:52 pm March 19, 2009

Yahoos With Pitchforks wrote:

They've taken over Congress!

5:32 pm March 19, 2009

RJ Johnson wrote:

Why should I care about what just Laurence Tribe had to say????? There's no one else who is an expert on the constitution??????

6:25 pm March 19, 2009

Chris B. wrote:

Tribe's Bill of Attainder analysis is absolutely insane. It takes for granted the stated purpose of targeting particular individuals, and suggests that we can do that, as long as we broaden the scope and clip many more people than we intended to target. By that logic, it is not a crime to shoot someone, as long as you also shoot up the entire house, because then you can argue that you were just shooting everything. B.S. you wanted to shoot these people, and you did. Now it may be that in some courts of law, if all we knew was that somebody shot up a whole house, we might believe the person's death was an accident. But that is not the case here. We all know full well who Congress wanted to hit.

7:49 pm March 19, 2009

Learned Foot wrote:

Would the desire of Congress to eviscerate something that they "agreed to" before meet the "legitimate government purpose" prong of substantive due process? After the U.S. government pays a tank manufacturer, could Congress enact a special tax against tank manufacturers for 90% of the income they receive from the government? I'm no fan of the bonuses, but this seems like a bad road to go down.

8:11 pm March 19, 2009

A voice in the darkness wrote:

It is completely outrageous that struggling as we are, anticipating hard times ahead. Our money is being spent as a reward for those who helped cause our economic crisis. It is outrageous that money that we could be using to replace that which was lost from our retirement accounts or college savings accounts, is being given to a bunch of “Wall Streeters”. Money that could have been used to help us pay our mortgages, or get caught up on our credit card bills, is going support the millionaire playboy lives of some failing bankers. Million dollar rewards going to further support the “Trump” like lifestyles of those who have failed our country.

If only that were the case, but it’s not.

My fellow main-streeters, soccer-moms and soccer-dads, Senators, Congressmen and Congresswomen, let’s all take a step back from the precipice we are about to leap off and take a deep cleansing breath.
The bonuses being paid out at AIG are not merit bonuses. These bonuses are not being paid out for going above and beyond reasonable expectations. These are retention bonuses. These bonuses were offered to keep the folks there who understand these highly complex financial instruments. AIG went to these people and pretty much said “We know you are going to try and run, but if you stay, and help us undo this mess, and do it well, we’ll pay you extra for doing so”. And they did. They did what was asked of them, and now we are telling them, tough luck. We don’t want to pay you, because we are jealous of the fact that you are making so much while we struggle.

Let’s put ourselves this same scenario. You’re a pretty successful stone mason, working as a subcontractor for the wall building division of a large construction company. You are asked to build an incredible complex and complicated wall, and every day, for the next year, you struggle and toil to do so.
On the last day, as your cleaning up your tools, looking forward to finding a new contract with a new company, your old boss comes up to you and says “We told you to build the wall in the wrong place, and if we don’t carefully take it down, it could cause the whole city to be flooded. We need to have the wall taken apart piece by piece, so the stones aren’t ruined. The whole company is going to go under because of this mistake, and we need to save the stones so we can sell them. We know you’ll want to move to another city to be safe but, you built the wall, so you are the best person to take it apart. We’d like to offer you a new contract for another six months. It will include a $25,000 bonus for staying and doing a good job.” So you think about it. You feel bad for the guy, agree to stay on under the new terms and sign the contract.
You work hard for the next six months, and painstakingly undo everything you worked hard to build. After receiving you last paycheck, bonus included (thank you very much), the brother of the owner of the failed company comes up to you and says that he provided financing, out of his pocket, to keep the company afloat for the last two months. He wants you to give him your $25,000 bonus, because, after all, it is really his money, right?

Wrong. You agreed to stay. You did the work as requested. It’s not your fault the company went under because the wall building division told you to build the wall in the wrong place. Heck you even did a great job building it, and taking it down! And now, not only is this guy after you for the bonus you earned, but the whole city is up in arms about the bonus, threatening both you and your family.

Now our elected representatives are considering going after these AIG employees because we all wish, during these hard times that we were the ones getting retention bonuses.

Are we willing to accept the precedent that will be set by this action? What comes next? What happens when the company you work for starts complaining to your congressman that they don’t like the terms of the employment contract you bargained for and they agreed to? What if they want him to propose a new bill undoing the whole thing? There a big powerful company and your just a weak individual.

Laws are set in place to protect the minority from the majority, to protect them from mob rule. Since when do Americans threaten to kill their neighbors because they are doing better for themselves than we are? Where are our leaders? Are they not supposed to stand up to the masses and do the right thing, no matter how unpopular it is? Is this the new change that we were promised? Decisions made based on fear, jealousy and uncertainty, a country run by mob rule?

Our forefathers warned us about times like these: "Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils. They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community." James Madison, Federalist Number 44, 1788. Also, Benjamin Franklin once said: “They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”

This is a slippery slope we are about to go down. Before doing so, maybe we better take a step back and take that deep cleansing breath.

8:15 pm March 19, 2009

Stephen R. Diamond wrote:

The bill of attainder clause has become impossible to apply because of its systematic attenuation. See http://tinyurl.com/d2u4y8 for analysis.

8:20 pm March 19, 2009

Lawrence J. Kramer wrote:

I am stupefied by Prof. Tribe's silly arguments. If Congress punishes an act, it has criminialized it. And if it punishes it retroactively, it has criminalized it retroactively, er, ex post facto. This tax is a fine levied on these employees for committing the crime of having been in the wrong place at the wrong time.

Moreover, If the only people affected by this legislation retroactively are the ones that Congressmen can be quoted as having set out to punish, the retroactive portion is a bill of attainder as to them. Perhaps the best known bill of attainder was passed by the Irish parliament against a list of thousands of people. Punishing everyone the Congress hates is just not allowed.

As a Jew, Prof. Tribe should be ashamed of himself for lending any credence to the idea of taking property from unpopular groups. Maybe he has heard the old saw that starts "When they came for the AIGers, I did nothing, because I was not and AIGer." Shame on him!

9:05 pm March 19, 2009

John from Ohio wrote:

I am deeply disturbed by this rash act of our Congress. This is a huge step toward denying personal freedoms and a giant step toward Socialism. This country made a huge mistake by falling for the line "Change we can believe in". This is a change that scares the hell out of me. I don't believe in any of it.

Hopefully an intelligent and fair judiciary will toss this bill in the trash where it truly belongs.

9:08 pm March 19, 2009

Anonymous wrote:

Some of these posters work in the financial industry. I wonder why they're so up in arms .... And just because people think this is "punishment" doesn't mean it has criminalized it. That seems so obvious that it's not worth stating. Don't get me wrong, I think that the law has potential problems with the prohibition against Bills of Attainder, but this is not a criminal law and thus should not be analyzed under ex post facto. Also, there is no and never has been any provision in the Constitution that applies to the federal government as the Contracts Clause applies to the states. It hasn't been incorporated -- it is not an amendment but is in the body of the Constitution.

Also, Obama will not nominate Tribe to the Court - he's simply too old and has rather recently had health problems. I doubt that he would even be in consideration.

9:28 pm March 19, 2009

Unjust Enrichment wrote:

7:49 -- The mob with torches and pitchforks now led by that screaming hyena Pilosi cares nothing about equitable principles, BUT... the AIG employees earned their bonuses, and now the government stands to unjustly enrich itself by stealing their compensation. An action seeking damages for unjust enrichment should succeed, thus returning the income to the lawful recipients. The judgment would give rise to taxable income, but at the rate applying generally, not the Barney Frank rate.

10:11 pm March 19, 2009

Taxing the Givebacks wrote:

Douglas Poling, the AIG lawyer who received the highest retention bonus, says after being waterboarded by Frank and Pilosi that he's ready to give the money back. My understanding of tax law, however, is that nothing can ever be undone. Mr. Poling apparently rendered services as agreed and received his bonus in full. It then became taxable income. Now he proposes to give $6.4 million to AIG, which he has no legal obligation to do. That's a gift, and since AIG is not a charity, any transfer would incur a gift tax. Poling would be well advised to tell Pelosi and Frank to go jump in the Potomac River.

10:35 pm March 19, 2009

MB wrote:

The broadness of this law is the insanity. It isn't even close to what it is intended. The "Family" income stipend of $250,000 is going to take in many "Non-executives" by simply being married to someone who makes a somewhat significant amount of money, is going to lose their small bonuses. I do work in a company that is going to be effected by this. We have secretaries working out of New York, who because of a higher cost of living and overtime rules, make $110,000. Now if they were married to an engineer, that would put them over $250,000 easily. In Charlotte, we have a Paralegal who probably makes somewhere between $50-70 a year. Her husband owns a small business that does quite well. Her bonus is going to be taxed at 90% because of it. Total crap.

12:14 am March 20, 2009

Oliver Wright wrote:

For someone of his standing and stature, Mr. Tribe's dismissals seem oddly perfunctory to me. Indeed, his final response on the Takings Clause is circular reasoning worthy of an LSAT wrong answer.

12:23 am March 20, 2009

Rajan wrote:

Poor Tim Geithner, my heart really bleeds for him.

His predicament is rather akin to the case of the hunter being hunted.

In fact, he committed a grave error of judgment in exchanging his cushy job at the New York Federal Reserve (that was his former perch, if I am not mistaken) where he could hobnob and chum with the denizens in the den of thieves, aka the Wall Street for the dubious distinction of a cabinet post in another similar den , aka washington, D.C. He ought to have anticipated that he would be damned if he did, damned if he didn't as the Treasury Secretary under the present precarious circumstances. Any success he manages to score, if at all, will automatically go to the score card of his boss, the Prez and, for any failure (a scenario much more likely), he will be hauled over coals by every passer-by in the street. Of course, there will be the customary "vote of complete confidence" from the Prez every now and then relayed through the White House spokesperson until he is eased out eventually in the wake of the gathering storm demanding his resignation.

I am sure that Geithner is regretting now, every minute of his waking hours, his fateful mistake in taking that call from Obama on that wintry night asking whether he would be keen on joining his team!

12:33 am March 20, 2009

Ben Masel wrote:

Tax as punshment: Precedent

After States passed Drug Stamp taxes in the '80s, without removing the Criminal penalties under the Uniform Controlled Substances Act, the 7th Federal Circuit, and I think a couple others, held the tax unconstitutional as double jeopardy.

8:10 am March 20, 2009

Voter's Remorse wrote:

Mr Tribe's can do attitude appears to sit on legalistic penumbras, devoid of moral content. By his standards, a person involved in a criminal enterprise is afforded greater protection under the law and the government has unlimited power of confiscation over otherwise law-abiding citizens. How long before such rationale is extended to recipients of dividends issued by enterprises outside the administration's favor?
It is wrong to terrorize bonus recipients into submission to prevent them from seeking justice in court. The threat of publishing names to an angry mob, brandishing the use "piano wire" to set things right can be more effective than a little tyrant's suggestion that suicide would placate the mob.

11:46 am March 20, 2009

JD wrote:

Instead of just explaining to the American People that we (Congress) made a mistake and entered into a deal with AIG without doing their due diligence and then taking the consequences, they deflect and point fingers. The government wastes more than this amount ($160M) every month and they are boo-radley about wasting more. I just love the fact that Congress, in the midst of this economic freefall, are still getting their pay raise. LOVE IT. If Congress had any constitution (no pun intended), they would freeze government pay until the economy starts growing again. FAT CHANCE OF THAT.

1:33 pm March 20, 2009

Jared J. H. Catapano wrote:

This is a touchy situation... I think these guys do owe the American people some payback, but I'm not sure if this is the right way to do it...

No. An AIG tax would not be held Constitutional. The government could regulate salaries, expenses, and compensation for entitities such as non-profits (but not the private sector). How about capping professor salaries and tuition rates. Put a spending cap on total salaries and two tier professors at 65 and 85,000. Taking back a bonus that was in a private contract as in the case of AIG is not only Anti-American but short sighted. The individuals receiving them were productive and have every right to the compensation. A trader can easily find a new home and AIG will be forced to earn less the next year without him. The class is narrowly drawn and the tax will not hold up in court. The congressman are attempting to cover for their poor negotiation skills in the bailout process.

7:43 pm March 20, 2009

Concerned American wrote:

This "outrage" over the AIG bonuses is a red herring. the democrats in congress knew about the entire time since it is THEY who wrote the bill and didn't let Republicans even read it much less contribute to it.

The crooks and criminals that call themselves 'legislators' need to all be removed from office, and some of them need to face their crimes in court.

The billions and trillions that these criminals are throwing around is OUR MONEY. They were sent to Washington DC as stewards of the people and they know no master other than their own greed and debauchery.

It is time to reclaim control of our country and put people in place that will honor the constitution and the laws of our land.

8:23 pm March 20, 2009

David Sutula wrote:

To say that a 'broad definition" would save this legislation from a challenge based on the attainder clause is, in itself, ex post facto. The law is drafted and passed and it is patently NOT broad. It will likely fail in this test if the bill is signed into law.
Another flaw in Test's reasoning is the idea that the constitutional ex post facto laws prohibition only applies only to criminal cases. To be sure, the Supreme Court has a long tradition of ruling in this vein, but there is nothing that prohibit this line of argument and it is pretty clear that the framers did not draw a line between civil and criminal application of this principal:
As Madison argued in Federalist 44, ex post facto laws in general are “contrary to the first principles of the social compact and to every principle of sound legislation.” In that vein, it can be argued successfully that the punitive tax on earnings already paid and planned for based on the laws at the time (and possibly spent already) is clearly contrary to the principals of the social compact. It seems that in such cases, especially ones argued to a largely conservative court, the lines between “criminal” and “civil” become blurred enough to weigh in the bonus recipient's favor.
THE REAL HORROR of this is that the representatives who voted against this bill were doing so in defense of the constitution that they've sworn to uphold and protect and they will ultimately pay the price in their next election season as they are lambasted with ads and speeches characterizing their vote as supportive of the AIG profiteers.

10:25 pm March 20, 2009

AMTbuff wrote:

If it walks like a duck and quacks like a duck, any honest Justice of the Supreme Court is going to call it a duck. The form of this bill doesn't matter. The substance is obviously targeted at individuals (making it a Bill of Attainder) for confiscation (making it a Fifth Amendment taking violation). And it's ex post facto to boot. A trifecta. Way to show your respect for the Constitution, Congress!

10:49 am March 22, 2009

NoName wrote:

We can look at this any way you want, but the bottom line is the government shouldn't have to create taxes to get back money it was happy to give away a month ago. There should have been a clauses written into all these government deals. The bonuses are a problem between AIG and its executives, what the goverment should do (since were making up new laws anyway) is fine AIG ten or twenty times what the bonuses were worth, that way if a law is passed all these companies will suffer the same fate.

12:45 pm March 22, 2009

AnotherNoName wrote:

Any commentary on Article One, section 8 regarding the uniformity requirement. Also, any commentary on the requirement that taxation be for the general welfare, and not for punitive purposes?

2:00 pm March 23, 2009

Sim wrote:

Fining AIG would be counterproductive since the point of the exercise is to get them back on their feet.

The bailout bill was posted online and if the Washington republicans didn't read it before voting on it that really is their own fault. The thing was huge and you'd need both knowledge of it and knowledge of these contracts to connect the dots. Very few people had both pieces of the puzzle and most of them were AIG employees who were keeping very quiet about it for obvious reasons.

Don't let distaste of the tax lead you into looking at these vermin with rose colored glasses. They weren't happy masons building a strong, sound, and beautiful wall who were misdirected into putting it in the wrong place. They were fools at best and crooks at worst dealing in the shady underbelly of the financial sector. Their building supplies were smoke and mirrors, not bricks and mortor. They are flim flam men and hucksters. And these "retension bonuses" were nothing more than blackmail as they chuckled evilly at their bosses and said, "go ahead, fire me for losing all your money. But you'll never figure out where I hid it all without me and you're only hope of getting any of it back is to pay me more".

Even scum has rights and protections under the law. But don't try to fool me our yourself into thinking that these people aren't scum. You insult my intelligence and you set yourself up to be taken for another ride. Imagine the damage that could be done if you talk yourself and others into believing that these were great, honest, productive people and they manage to parlay that PR spin into another job in the financial sector. *shudder*.

12:28 pm March 24, 2009

Tom wrote:

Laurence Tribe is a down in the weeds socialist. Glib comments referring to certain issues as state's issues only is nothing but a self-serving ingratiation to this big government advocate. Government cannot retroactively take back what it wants when faced with the stupidity it committed months earlier. This is only the first step.

David Sutula's comments above are spot on!

We have a constitution for a reason; it's too bad the man who took the oath to protect and defend it doesn't believe in it.

2:48 pm March 24, 2009

Oscar BullFrog wrote:

the mad hatter strikes again .... geezzzzz-0-tribe! such a flippant disregard by weasel-wording.

3:59 pm March 24, 2009

Oystein Eide wrote:

To Big To Fail, or a Failure too Big?

“It is time Corporate America takes responsibilty for the economic regression that is taking place in America. It’s interesting to see that during economic growth, we experience private wealth, and during regression we expect society to bail companies out. A loose-loose for society, and a win-win for greedy individials.”
If a company gets to be the size of AIG or an equivalent, the Government will eventually not “allow” that company to collapse due to the side effects such bankruptsy will have on macro economy. This is what Obama is referring to as “keeping us hostage”.
They are just too big to fail.

It is a shame that chief executives in AIG or similar companies for that matter clearly have no business ethic whatsoever, and that the only moral prevailing on Wall Street has been based upon greed and egoism. The last few years of economic growth have (mis)lead us to believe that the people in these companies have done such a great job that deserves ridiculously high wages and bonuses. These same people are the ones that today are claming the right for bonuses during a period of decline. It has to be the biggest win-win-lottery in history:

"Do a great job job, get a bonus, do a medioker job and get a bonus" ! Such a statement is highly un-American, and breakes any norm this country is built upon; Success through hard labour is rewarded. It also goes against any economic nature-law that steers the money-flow in any capitalistic society.

I am sorry to break the news to liberal economists in America: If you want to play by the rules of a free market oriented economy, you would have to abide by these same rules during times of regression. Otherwise these so-called nature laws of a free marked are only make-belive, and we would need to reinvent modern economic models. I think the last months of has proven that the free market rules do not work, the rules are NOT in the best ineterest of the nation, nor the companies here are set to protect. So why don´t we change the rules?

Well, Wall street has been changing the rules of the game. They have even changed the game itsself, from Monopoly to Poker half way through, which must certainly have left you shot dead in a Poker Saloon some two houndred years ago. The only difference from today is that we, the public, (the taxpayers) aren´t present at the poker table, we are only paying for it!

What has happended during the last few years, is the Cooperations, with the Bush adminstration as their biggest fan, seecretly changed the rules of the free capitalist economy. The performance based bonuses have made a small number of people filthy rich, it has been the fuel for business leaders and CEO´s all around the world to perform better, and to make sure that under-achievers aren´t rewarded. In the case of the AIG bonuses, the under-achievers are rewarded, just “because it´s legal” or that they are in a position to negotiate these contracts. It¨s like KENO with only one number.

The last few weeks of focus on AIG has shown the world what is taking place in the seecret business world of America. Everybody is in it for themselves, and to milk the system for cash is the driving force behind any decicion. No higher sense of social and community feeling is present in these peoples minds. No wonder why the sysem finally collapsed, the same system that helped these people to get where they are today.

Think about this Mr AIG Chief Executive: Your million dollar bonus is paid for by Mr. and Mrs. Johnson, who lost their jobs in Detroit this year, or Mr. Harrison of Baltimore who had to sell his house when he lost his job at the Automotive Company.
Think about this when you order your next frozen Margarita at your wonderful vacation spa resort in Key West Florida. I hope you choke!

In the hearing in Congress today Mr Geithner claims that “these bonuses are legal, and we steer by laws in this country”. To Mr Geither I have this to say; Many things in our country are legal, but that doesn´t mean we will do them. Moral and ethichs is a higher law, somthing the AIG excecutives seem to have forgotten this on their way to the top.

PS!

I wonder when all this is over, when America is back on its feet, and when AIG is making money again, that these same Business Executives still is promoting tax-cuts, and that the government should keep their hands out of their fine silk pockets?

Oystein Eide, Waltham, Mass.

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